Just as the bull market for stocks is set to become the longest in history, U.S. investors are confronted with another crisis from a far corner of the world.

What's giving Wall Street the jitters this time is Turkey's plunging currency, which is down about 40 percent this year against the dollar.

Despite a brief respite and nearly 8 percent rebound Tuesday, the Turkish lira's free fall is causing acute economic pain in that country's economy, the world's 17th largest, and sowing fears that Turkey's woes will spread to other countries.

Those concerns are already undermining confidence in global financial markets and causing asset prices to fall, especially in emerging markets and Europe. The damage has been more muted in the U.S., however, where the Dow Jones industrial average rose 112 points Tuesday, making up some of the ground lost the prior two trading days, when it shed more than 300 points.

From local to global crisis?

Could Turkey's currency crisis grow more damaging for Americans, upending 401(k) accounts and derailing the broad U.S. stock market, which has delivered hard-earned gains of 6.2 percent this year after rallying more than 19 percent last year?

The turbulence in Turkey bears watching, for sure, and will make it harder for that country to pay off its sizable debt of dollars held by global banks with its weakened lira, but investors need to keep things in perspective, Wall Street pros say.

While there's always a chance that so-called financial "contagion" can occur and turn one country's misery into a broader problem, it's unlikely the turmoil will infect the U.S. economy, corporate earnings or stock market in a major way.

"We are not expecting that the situation in Turkey will deteriorate to the extent that it poses a threat to the world economy," John Stoltzfus, chief investment strategist of Oppenheimer Asset Management, wrote in a research report.

And when it comes to downplaying the contagion risk as a bull market killer, Stoltzfus is not alone.

In a report titled, "Is Turkey A Game Changer?" Chris Verrone, a partner at New York-based investment firm Strategas Research Partners, reminds investors that the resilient bull this year alone has survived a number of scares.

Nearing a record

The bull, which on Aug. 22 is expected to eclipse the 1990s bull run as the longest ever for the benchmark Standard & Poor's 500 stock index, has weathered the steep sell-off in January that caused the market to suffer its first 10 percent drop in two years; trade disputes between the U.S. and its trading partners; and Facebook's record-breaking one-day drop that erased $100 billion of its market value.

Verrone notes that the U.S. debt markets – at least so far – have yet to show any signs of stress related to Turkey's currency woes. The credit stress "remains contained," he noted.

One reason why credit markets at home have not run into problems is due, in part, to the fact that U.S. banks have a very small exposure to Turkey's sovereign debt, with roughly 0.5 percent of their assets exposed to debt tied to Turkey, according to J.P. Morgan Asset Management. In all, U.S. banks have about $18 billion in exposure to Turkish debt, according to the Bank for International Settlements.

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People walk near a pub in Istanbul, Aug. 15, 2018. The Turkish lira has nosedived in value in the past week, but some Turks are reacting with defiance to their plunging currency and an escalating trade and political dispute with the United States. ERDEM SAHIN, EPA-EFE

A restaurant worker poses for a photograph in Istanbul, Aug. 15, 2018. Turkish President Erdogan says Turkey will boycott U.S. electronic goods, including Apple's iPhone and slapped an additional tax on imports of American goods from cars to rice to alcohol. Lefteris Pitarakis, AP

Gold bracelets are displayed at a shop in Istanbul, Aug. 15, 2018. Gold buyers say they have seen an uptick over the past few days of customers selling their shiny coins and goods. The Turkish lira has dropped to record lows in recent weeks, having fallen some 42 percent so far this year. Lefteris Pitarakis, AP

People wait at a currency exchange shop in Istanbul, Aug. 15, 2018. The Turkish lira has nosedived in value in the past week, but some Turks are reacting with defiance to their plunging currency and an escalating trade and political dispute with the United States. Lefteris Pitarakis, AP

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And in the bigger picture, Turkey's "economy accounts for just 1 percent of the global economy" when measured by market exchange rates, according to U.K. based research firm Capital Economics. Another buffer is other emerging market economies have "limited trade and financial ties" with Turkey, the firm added.

Still, Turkey’s economic problems, which include high inflation, large deficits, expensive borrowing costs, mounting debt and additional pain caused by President Donald Trump's recent doubling of tariffs on Turkey’s steel and aluminum exports, are magnified by the dramatic decline in the value of its lira. At the start of the year, it took about 3.8 lira to buy a dollar; in Tuesday trading, it took 6.4.

Why contagion is possible

The broader worry – and the one that concerns analysts who fear contagion – is that Turkey’s ability to pay its debts owed in dollars will be more difficult as its currency loses value. And if Turkey can't pay on time and defaults, it could create risk and losses for banks around the world that hold an estimated $223 billion of Turkish debt, according to BIS data.

The banks most exposed to Turkey are ones based in Europe, particularly Spain, which held $81 billion in Turkish debt at the end of March, according to the BIS, and France ($35 billion) and Italy ($18.5 billion).

"Turkey has been a huge borrower in global capital markets over the past number of years," David Rosenberg, chief economist and strategist at Toronto-based Gluskin Sheff, wrote in a report. "Over half of the borrowing is denominated in foreign currencies, so when the lira sinks, debt-servicing costs and default risks rise inexorably."

So if Turkey’s problems are to spread and begin infecting other countries, the biggest pain is expected to be felt in European banks, as well as other emerging market countries that are running deficits, such as Argentina, Indonesia and South Africa. Those countries might have a similar problem paying off debts if their currencies suffer losses as worried traders withdraw from markets.

American impact

For Americans, investments they hold in emerging markets may continue to come under pressure until Turkey's currency stabilizes. If Europe’s banks suffer losses, it could harm the eurozone economy and perhaps eat into U.S. corporate profits.

But the U.S., thanks to a strong economy, is now viewed as a haven, which likely means more money flowing into the country and boosting asset prices at home.

"The U.S. dollar will continue to shine," Katie Nixon, chief investment officer at Northern Trust Wealth Management, told USA TODAY via email, adding that risk-averse investors will also move cash into U.S. government bonds.